(Edgar Glimpses Via Acquire Media NewsEdge)
Special Note: Certain statements in this quarterly report on Form 10-Q
concerning our business prospects or future financial performance, anticipated
revenues, expenses, profitability or other financial items, estimates as to
size, growth in or projected revenues from the life settlement market,
developments in industry regulations and the application of such regulations,
expected outcomes of pending or potential litigation and regulatory actions, and
our strategies, plans and objectives, together with other statements that are
not historical facts, are "forward-looking statements" as that term is defined
under the federal securities laws. All of these forward-looking statements are
based on information available to us on the date hereof, and we assume no
obligation to update any such forward-looking statements. You should carefully
review the risks described herein and in other documents we file from time to
time with the Securities and Exchange Commission, ("SEC"), including our Annual
Report on Form 10-K for the year ended August 31, 2013 ("Fiscal 2013"),
particularly in the sections entitled "Item 1A - Risk Factors" and "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Unless required by law, we undertake no obligation to publicly revise any
forward-looking statement to reflect circumstances or events after the date of
this Report or to reflect the occurrence of unanticipated events. Shareholders
and potential shareholders should, however, review the factors and risks we
describe in the reports we will file from time to time with the SEC after the
date of this Report. Management cautions that these statements are qualified by
their terms and/or important factors, many of which are outside of our control,
and involve a number of risks, uncertainties and other factors that could cause
actual results and events to differ materially from the statements made,
including, but not limited to, the following:
· actual or anticipated fluctuations in our quarterly and annual operating
results;
· actual or anticipated product constraints;
· decreased demand resulting from changes in laws;
· product and services announcements by us or our competitors;
· loss of any of our key executives;
· regulatory announcements, proceedings or changes;
· competitive product developments and legal developments;
· any business combination we may propose or complete;
· any financing transactions we may propose or complete; or
· broader industry and market trends unrelated to its performance.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements.

Overview
During the year ended August 31, 2012, we formed a wholly-owned subsidiary
Infinity Augmented Reality, LLC ("IAR Subsidiary") which was actively engaged in
the development of software applications which will utilize augmented reality.

On February 26, 2013, the Company memorialized its understandings regarding
prior and future activities with Infinity Advanced Technologies LTD ("IATL"), a
company organized under the laws of the State of Israel which is developing
applications for the Company's augmented reality activities. In consideration of
the services provided, IATL shall be entitled to receive a monthly base fee of
$53,000. Additional charges may be incurred upon prior approval of the Company.

Effective June 30, 2013, the Company terminated its services agreement with
IATL.

Effective March 7, 2013, we changed our name from Absolute Life Solutions, Inc.

to Infinity Augmented Reality, Inc. On that same date, we merged our IAR
Subsidiary into the Company. We are currently actively engaged in the
development of Augmented Reality software. Our objective is to establish ourself
firmly as a preeminent source for state-of-the-art augmented reality
experiences, forging a strong association, early on, between the Infinity brand
and the burgeoning medium.

Augmented reality is a medium in which real sensory inputs are enhanced,
or augmented, with relevant digital information from the Internet. Using
specially equipped eyewear, virtual images, video, and sound are superimposed
for the user over what is actually seen and heard, heightening the real-life
experience with additional information that is pertinent, informative,
practical, and/or entertaining. The individual user may also be fully immersed
in a virtual world, temporarily blocking out real surroundings. With augmented
reality, sensory inputs are no longer limited to what is within eyeshot or
earshot, but may incorporate, in real-time, all that the network has to offer.

Augmented reality requires an interface, such as digitally-enhanced eyewear,
that can instantaneously overlay virtual images and video on top of what is
actually experienced. There are few companies in the process of developing
augmented reality glasses that will change the way users see and interact with
the world. We will utilize our augmented reality software through these glasses
and/or through other mobile devices such as smart phones. As the individual
turns his or her head in various directions and looks at different people or
objects through the eyewear, the sights that are overlaid change accordingly.

20
--------------------------------------------------------------------------------Results of Operations
Our results of operations for the three months and six months ended February 28,
2014, consisted of research and development, Marketing and administrative
expenses for personnel, leased office space and professional fees, income tax
expense and loss from discontinued operations.

Interest Expense: Interest expense for the three months and six months ended
February 28, 2014 increased to $191,816 and $322,748 respectively as compared to
$0 in the three months and six months ended February 28, 2013. Interest expenses
include interest on Convertible Debts and amortization of debt discount related
to convertible debt.

Income Tax: Income tax expense for the three months and six months ended
February 28, 2013 respectively was $27,783 and $190,652. The expenses are
primarily attributable to an increase in the valuation allowance because the
Company entered the development stage.

There were no income tax expenses resulting from changes in the deferred tax
asset in the three months and six month ended February 28, 2014 because we
recorded a full valuation allowance against the deferred tax asset resulting
from the our NOL, since we concluded that it is more likely than not that we
will not realize the benefit of our deferred tax assets by generating sufficient
taxable income in future years.

Net Loss from continuing operations: We reported a net loss from continuing
operations of $1,818,412 and $3,013,381 for the three months and six months
ended February 28, 2014 respectively compared to a net loss of $649,786 and
$1,073,325 for the three months and six months ended February 28, 2013
respectively. The increase of $1,168,626 and $1,940,056 is primarily
attributable to an increase of $484,692 and $829,491 in research and development
expenses, an increase of $528,590 and $998,354 in marketing and general and
administrative expenses for continuing operations, an increase of $191,816 and
$322,748 in interest expense for continuing operations, an increase of $8,689
and $19,884 in foreign exchange gains on our investment in Infinity Israel and a
decrease of $27,783 and $190,652 in income tax expense for continuing
operations. Refer to preceding discussions for explanation of variances.

Loss from discontinued operations: Loss from discontinued operations was
$114,966 in the three months and six months ended February 28, 2014
respectively. The expenses resulted from a true up of income taxes related to
the year end 2012 and 2013 tax returns.

21
--------------------------------------------------------------------------------Liquidity and Capital Resources
Net cash used in operating activities for the six months ended February 28, 2014
was $2,173,903. Net cash used in investing activities was $70,803 arising from
purchase of computer equipment. Net cash provided by financing activities was
$2,099,926 arising from proceeds from convertible debentures and exercise of
stock options. This resulted in a decrease in cash of $143,836.

Working Capital and Capital Availability: As of February 28, 2014, we had
negative working capital of $1,170,995 consisting of negative working capital of
$297,074 from continuing operations and negative working capital of $873,921
from discontinued operations. Subsequent to February 28, 2014, we issued
Convertible Debentures and received aggregate proceeds of $100,000. To provide a
secure and assured source of financing to the Company for its funding needs
through the end of 2014, Credit Strategies LLP (the "Lead Investor"), on behalf
of itself and its affiliates, and Genesis Angels Fund LP, a limited partnership
organized under the laws of New Zealand (collectively the "Purchasers"), have
agreed to purchase $2,500,000 in the aggregate of the Company's Convertible
Debentures Series A-14, bearing an interest rate of 1.20% per annum, payable
semi-annually in cash or kind, at the Company's option, convertible into the
Company's Common Stock at the rate of $0.25 per share together with Warrants to
purchase up to 10,000,000 shares of Common Stock at an exercise price of $0.50
per share, both expiring March 31, 2019.

On March 24, 2014, the Company's board of directors approved the Securities
Purchase Agreement with each of the Purchasers, substantially upon the terms set
forth in the Securities Purchase Agreement (the "2014 SPA"), and to accept the
offer of each of the Purchasers, to purchase its respective portion of the
$2,500,000 of the Company's Convertible Debentures Series A-14 with Warrants on
the terms previously set forth in the 2014 SPA. We anticipate that barring
unforeseen developments, the proceeds received from these subsequent debt
financings will sustain our operations until December 31, 2014. To date, we
issued a total of approximately $4,057,543 of Convertible Debentures with a
maximum available of $5,000,000. We anticipate raising additional funds to
continue our augmented reality operations through subsequent debt or equity
offerings to one or more accredited investors. Such issuances may dilute the
interests of our existing shareholders. During the next twelve months, we
anticipate that we will not generate significant cash from operations. We are
unable to estimate our working capital requirements and capital availability for
the next twelve months.

Going Concern Qualification
The Company will require additional funds to finance its new augmented reality
operations. Effective November 15, 2012, we are a development stage company
dependent upon the expected demand for our software applications and our ability
to generate sufficient cash from our augmented reality business to meet our
obligations as they come due. We may not be able to obtain additional financing
on reasonable terms or at all. These conditions raise substantial doubt about
our ability to continue as a going concern. However, there can be no assurance
that the Company can successfully implement its business plan, and it is
uncertain that the Company will achieve a profitable level of operations and be
able to obtain additional financing. There can be no assurance that any
additional financings will be available to the Company on satisfactory terms and
conditions, if at all.

Application of Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations are
based on our financial statements that were prepared in accordance with
accounting principles generally accepted in the United States of America. To
guide our preparation, we follow accounting policies, some of which represent
critical accounting policies as defined by the SEC. The SEC defines critical
accounting policies as those that are both most important to the portrayal of a
company's financial condition and results and require management's most
difficult, subjective, or complex judgment, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. Certain accounting estimates involve significant
judgments, assumptions and estimates by management that may have a material
impact on the carrying value of certain assets and liabilities, disclosures of
contingent liabilities, and the reported amounts of income and expenses during
the reporting period that management considers critical accounting estimates.

The judgments, assumptions and estimates used by management are based on
historical experience, management's experience, knowledge of the accounts and
other factors that are believed to be reasonable. Because of the nature of the
judgments and assumptions made by management, actual results may differ
materially from these judgments and estimates, which could have a material
impact on the carrying values of assets and liabilities and the results of our
operations. Areas affected by our estimates and assumptions are identified
below.

We apply the principles of ASC 985-20, Software- Costs of Software to Be Sold,
Leased, or Marketed, which requires that software development costs incurred in
conjunction with product development be charged to research and development
expense until technological feasibility is established. Thereafter, until the
product is released for sale, software development costs must be capitalized and
reported at the lower of unamortized cost or net realizable value of the related
product. We have adopted the "tested working model" approach to establishing
technological feasibility for its products. Under this approach, a product in
development is not considered to have passed the technological feasibility
milestone until we have produced a model of the product that contains
essentially all the functionality and features of the final product and have
tested the model to ensure that it works as expected. We have expensed all
software development costs when incurred since they have not reached
technological feasibility.

We account for the BCF and warrant valuation in accordance with ASC 470-20, Debt
with Conversion and Other Options. We record a BCF related to the issuance of
convertible debt that has conversion features at fixed rates that are
"in-the-money" when issued and the fair value of warrants issued in connection
with those instruments. The BCF for the convertible instruments is recognized
and measured by allocating a portion of the proceeds to warrants, based on their
relative fair value, and as a reduction to the carrying amount of the
convertible debt equal to the intrinsic value of the conversion feature. The
discount recorded in connection with the BCF and warrant valuation is recognized
as non-cash interest expense and is amortized over the terms of the convertible
notes.

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We record stock-based compensation expense in accordance with ASC 718,
Compensation - Stock Compensation. We expense stock-based compensation to
employees over the requisite service period based on the estimated grant-date
fair value of the awards and forfeiture rates. For stock-based compensation
awards to non-employees, we re-measure the fair value of the non-employee awards
at each reporting period prior to vesting and finally at the vesting date of the
award. The assumptions used in calculating the fair value of stock-based awards
represent management's best estimates and involve inherent uncertainties and the
application of management's judgment.

We review the carrying value of the property and equipment for impairment
whenever events and circumstances indicate that the carrying value of an asset
may not be recoverable from the estimated future cash flows expected to result
from its use and eventual disposition. In cases where undiscounted expected
future cash flows are less than the carrying value, an impairment loss is
recognized equal to an amount by which the carrying value exceeds the fair value
of assets. The factors considered by management in performing this assessment
includes current operating results, trends and prospects, the manner in which
the property is used, and the effects of obsolescence, demand, competition and
other economic factors. Based on this assessment, there was no impairment during
the six months ended February 28, 2014.

We evaluate the useful lives of our property and equipment to assure that an
adequate amount of depreciation is being charged to operations. Useful lives are
based generally on specific knowledge of an asset's life.

We are required to estimate our income taxes. This process involves estimating
our current tax exposure together with assessing temporary differences resulting
from differing treatment of items for tax and financial reporting purposes.

These differences result in deferred tax assets and liabilities. We then assess
the likelihood that our deferred tax assets will be recovered from future
taxable income, and, to the extent we believe that recovery is not likely, we
establish a valuation allowance. To the extent we establish a valuation
allowance or increase this allowance in a period, we include a tax provision or
reduce our tax benefit in the statements of operations. We use our judgment to
determine our provision or benefit for income taxes, deferred tax assets and
liabilities and any valuation allowance recorded against our net deferred tax
assets.

We cannot predict what future laws and regulations might be passed that could
have a material effect on our results of operations. We assess the impact of
significant changes in laws and regulations on a regular basis and update the
assumptions and estimates used to prepare our financial statements when we deem
it necessary.

We have not made any material changes to our critical accounting estimates or
assumptions or the judgments affecting the application of those estimates or
assumptions.

Off-Balance Sheet Arrangements
We did not engage in any off-balance sheet arrangements or transactions.

Outlook
Effective March 7, 2013, we changed our name from Absolute Life Solutions, Inc.

to Infinity Augmented Reality, Inc. On that same date, we merged our IAR
Subsidiary into the Company. We are actively engaged in the development of
software platform, which will utilize Augmented Reality. On February 26, 2013,
we memorialized our understandings regarding prior and future
activities with Infinity Advanced Technologies LTD ("IATL"), a company organized
under the laws of the State of Israel which is developing applications for our
augmented reality activities. Effective June 30, 2013, the Company terminated
its services agreement with IATL.

We are currently in the process of developing a number of augmented reality
technologies. We believe our Company and our industry are fundamentally sound
and well positioned to deal with the current uncertainty in the financial and
capital markets. We carry no operational debt and do not rely on leverage in our
capital structure. We do rely, however, upon the availability of investment
capital. While it is conceivable that a financial crisis could diminish the
supply of investment capital throughout the economy, we believe that greater
investment capital will be placed in the augmented reality sector. We believe
this is due to the fact that augmented reality is one of the technologies of the
future.

We believe that domestic and international demand for augmented reality products
will continue to grow as the industry continues to mature.